2016 (10) TMI 414 - AT - Income Tax

Unexplained cash credits - rental advance received - Held that - Admittedly there is no dispute over Cenotaph Road property acquired by the assessee. It is the submission of the assessee that cash deposit of .5, 00, 000/- relates to rental advance received from the previous owner for letting out the property on rent. He also submits that the rental advance paid by the tenant earlier was held in credit by the previous owner and once the property was acquired by the assessee the rental advance received by the previous owner was directly deposited in cash into assessee s bank account. If the above amount was deposited by the previous owner of the property what prevented the assessee to furnish the details of his PAN identity address etc. before the Assessing Officer for verification. The copy of the rental agreement filed by the assessee cannot be accepted as a valid document since the rental agreement in the twenty Rupees non-judicial stamp paper does not contain valid details such as PAN number of two tenants or the rental agreement was notarised by Registered Notary or it is registered document. As in the document it was mentioned that the amount of .5, 00, 000/- towards rental advance shall be payable by the tenants to the owner of the property but no evidence has been filed by the assessee before any of the authorities. Not only that the assessee has not furnished any details about the PAN number identity of the tenants etc. In the absence of any valid evidence the submissions of the assessee are not acceptable. In the written submission dated 13.10.2015 before the ld. CIT(A) the assessee has also submitted that no independent enquiry was made by the Assessing Officer. Without giving any details about the tenants it is not possible for the Assessing Officer or the ld. CIT(A) to make enquiry or order the Assessing Officer to make enquiry. Hence the submission is vague. In the written submission dated 13.10.2015 before the ld. CIT(A) at para 3.9 the assessee submits that there is no need for him to provide any documentary evidence to show the receipt of .6, 00, 000/- so long the previous owner of the Cenatoph Road property did not contradict the payment of .6, 00, 000/- to the assessee or the Assessing Officer has any information to that effect which he has chosen to bring upon record in support of the assessment order appears to be contrary to the rental agreement wherein it was mentioned that the tenants have paid the rental advance/payable to the owner of the property Shri Selvam the assessee. In view of the above fact and circumstances we are of the opinion that the addition made by the Assessing Officer was rightly confirmed by the ld. CIT(A) and accordingly the ground raised by the assessee is dismissed.

Summary

Issues Involved:
1. Addition of ?57,00,000/- as unexplained credits.
2. Addition of ?6,00,000/- as rental advance.
3. Addition of ?25,00,000/- as cash deposit from agriculturist.
4. Addition of ?15,00,000/- as advance received for property sale.
5. Addition of ?11,00,000/- as cash deposit for new business.

Issue-Wise Detailed Analysis:

1. Addition of ?57,00,000/- as unexplained credits:
The assessee contested the addition of ?57,00,000/- as unexplained credits, arguing that the Commissioner of Income-tax (Appeals) confirmed the addition without proper enquiry or examination of the concerned persons. The Tribunal found that the assessee failed to provide sufficient documentary evidence to establish the genuineness of the transactions, identity, and creditworthiness of the creditors. The Tribunal upheld the addition, noting that the assessee did not discharge the onus of proving the credits/deposits.

2. Addition of ?6,00,000/- as rental advance:
The assessee claimed that ?6,00,000/- deposited on 09.09.2010 was a rental advance from an existing tenant. The Assessing Officer and the CIT(A) found that the assessee failed to provide the tenant's identity, address, and other relevant details. The rental agreement submitted was not considered valid due to lack of notarization and other necessary details. The Tribunal upheld the addition, emphasizing the absence of valid evidence and contradictions in the assessee’s explanations.

3. Addition of ?25,00,000/- as cash deposit from agriculturist:
The assessee argued that ?25,00,000/- deposited on 07.02.2011 was from S. Sathyamurthy, an agriculturist. The Assessing Officer added this amount as unexplained cash credit under section 68, noting the lack of documentary proof and the improbability of a small farmer mobilizing such a large sum. The Tribunal remitted the matter back to the Assessing Officer for further verification, instructing the assessee to produce S. Sathyamurthy and relevant details for verification. If the assessee fails to do so, the addition will stand sustained.

4. Addition of ?15,00,000/- as advance received for property sale:
The assessee claimed that ?15,00,000/- deposited on 19.02.2011 was an advance for the sale of property, which was later returned. The Assessing Officer and the CIT(A) found that the assessee failed to provide the identity of the person from whom the advance was received and other necessary details. The Tribunal upheld the addition, noting the lack of documentary evidence and the failure to establish the genuineness of the transaction.

5. Addition of ?11,00,000/- as cash deposit for new business:
The assessee explained that ?11,00,000/- deposited in an undisclosed bank account was advanced by a friend, R. Vijayanathan, for a new business venture. The Assessing Officer added this amount under section 69A, citing the lack of documentary evidence and the failure to disclose the bank account initially. The Tribunal remitted the matter back to the Assessing Officer for further enquiry, instructing the assessee to produce R. Vijayanathan and relevant details for verification. If the assessee fails to do so, the addition will stand sustained.

Conclusion:
The Tribunal upheld the additions of ?6,00,000/- and ?15,00,000/- due to lack of evidence and proper documentation. The additions of ?25,00,000/- and ?11,00,000/- were remitted back to the Assessing Officer for further verification, giving the assessee another opportunity to substantiate the claims. The appeal was partly allowed for statistical purposes.